


AMERICAN PUBLIC PENSION SYSTEMS AND CIVIL 
SERVICE RETIREMENT PLANS 


BY 


FREDERICK L. HOFFMAN,°*LL.D., 


Statistician, The Prudential Insurance Company of America, Newark, New. Jersey. 


A full discussion of American pension systems and civil service 
retirement plans would make a most useful and interesting contri- 
bution to insurance science. There is probably no department of the 
government which affords a better illustration of the practical 
value of qualified actuarial advice than the pension and retirement 
plans of the United States. Most of the methods or plans which 
have been adopted or followed have been in disregard of or 
indifference to actuarial considerations and as a result the actual 
cost has invariably been far in excess of the original estimates 
of the probable expense. It is only within very recent years that 
actuarial principles have occasionally been applied to the solution 
of service retirement problems in the United States and the present 
outlook would seem to be quite favorable for a future enlargement 
of the actuarial function in its relation to questions of public 
administration and finance. 


1. Pensions Derned. 


In the common acceptance of the term, a fension in its legal 
aspects in the United States is defined as ‘‘a stated and certain 
allowance granted by the government to an individual, or those 
who represent him, for valuable services performed by him for 
the country.” 1) This definition is practically inclusive of military 
and naval pensions and it does not strictly apply to questions 


- 1) Bouvier’s Law Dictionary, Vol If, p. 647. 





2 Hoffman. American Pubiic Pension Systems. 


of voluntary or compulsory service retirement allowances. One 
of the earliest definitions of a pension in English law is given 
in the ‘New Law. Dictionary’ by GILES JACoB (London, 1744), 
in which it is held that a pension “is a yearly payment of 
money in recompense of service”, and this principle practically 
underlies the entire public pension system of the United States 
from the beginning of the government to the present time. It has 
been observed in this connection by Mr. WORTHINGTON C. FORD 
that “If there be any principle recognized and established in this 
country it is that pensions must be confined to those who were 
separated by the nature of their service from the great mass of 
the community, and who devoted themselves exclusively to military 
duties; who laid aside the character of a citizen and became a 
soldier; who, in abandoning the pursuits, extinguished also the 
habits, of private life’’. 1) | 

As a broad principle, it may be stated that there have been few 
exceptions to this rule, but in 1869 a law was passed by Congress 
providing that “Any judge of the United States, who, having 
held his commission as such at least ten years, shall, after having 
attained the age of seventy years, resign his office, and shall — 
thereafter during the residue of his natural life receive the same 
salary which was by law payable to him at the time of his 
resignation”. 2) Aside from the military pensions granted by the 
United States government and the pensions of judges of the 
United States courts, a limited pension arrangement has been 
effected for the employees of the Life Saving Service and also 
for Army nurses performing actual services during time of war. 
Quite a number of special acts of Congress have provided pensions 
of variable amounts for the widows of ex-Presidents, and to other 
individuals, including the widow of a professor in the Naval Academy, 
and the Baron VON STEUBEN, who, for services in connection with 
the Revolutionary War, was granted a pension of $ 2,500 during life, 
in full discharge of all claims and demands against the United States. 


2. The Beginning of Pension Legislation tn the U. S. A. 
The earliest pension legislation of the Federal government. was 
an act of the Continental Congress, of August 26, 1776, under 


1) LALOR’s Cyclopedia of Political Science, Vol. III, p. 1023. 
2) See Section 34 of this discussion. 





47 Avge 


sees 
Be 


age ble 


Hoffman. American Public Pension Systems. | 3 


cee) 


which pensions were promised to soldiers and sailors disabled’ in 
the Revolutionary War. Additional legislation was enacted in 
1778, promising half-pay for seven years after the end of the war 
to all commissioned officers who should serve until its termination. 
On account of the historic importance of the act of 1776, the 
Same is given, in part, as follows: 1) 

“Whereas, in the course of the present war, some commissioned and 
non-commissioned officers of the army and navy, as also private soldiers, 
marines, and seamen, may lose a limb, or be otherwise so disabled as to 
prevent their serving in the army or navy, or getting their livelihood, and 
may stand in need of relief: 

Resolved, That every commissioned officer, non-commissioned officer, 
and private soldier, who shall lose a limb in any engagement, or be so 
disabled in the service of the United States of America as to render him 
incapable afterwards of getting a livelihood, shall receive, during his life, 
or the continuance of such disability, the one half of his monthly pay 
from and after the time that his pay as an officer or soldier ceases; to 
be paid by the committee as hereafter mentioned:” 


3. Furst Pension Act Passed by U. S. Congress. 


The first act of Congress, subsequent to the adoption of the 
Constitution, relating to pensions, passed on September 29, 1789, 
provided that pensions which had theretofore been paid by the 
several states should thereafter be paid by the United States under 


such regulations as the President should direct. In 1796 it was 


enacted by the United States Congress that every officer and private 
oof the militia or volunteers who was wounded or disabled while 
in the line of his duty in actual service, was entitled to be placed 
on the list of invalids at such rate and under such regulations as 
“ithe President should direct, subject to the limitation, however, 


. Ee that the rate of compensation was never to exceed for the highest 


— J disabilities one-half the monthly pay of any commissioned officer 


et the time of his being so disabled; and to non- -commissioned 


4) 
_ officers, musicians and privates the compensation was never to 

vexceed five dollars per month; and for all inferior disabilities a 
sum in proportion to the highest disability was allowed’. Subse- 


4 Ch 


quent to this date there has been a large amount of legislation 


: relating to pensions of officers and privates in the United States 
Army and Navy, but an act of peculiar significance was passed 


1) Journals of the Continental Congress, Vol. V, p. 702. 


4 Hoffman. American Public Pension Systems. 


in 1812, providing that ‘2 °/, of the net amount of the prize 
money arising from captured vessels and cargoes and of the salvage 
of vessels and cargoes recaptured by the private armed vessels of 
the United States, was directed to be paid to the collector or chief 
officer of the Customs, at the place at which such captured or 
recaptured vessel might arrive in the United States; or to the 
consul, or other public agent of the United States, residing at the 
place, not within the United States, at which such vessels might 
arrive. The monies paid as aforesaid, were pledged as a fund, for 
the support and maintenance of the widows and orphans of such 
persons as might be slain, and for the support and maintenance 
of such persons as might be wounded and disabled, on board of 
the private armed vessels of the United States, in any engagement 
with the enemy’. 1) 

In 1813 it was further provided, with reference to this act, that 
the money so collected should constitute a fund for the benefit of 
the officers, seamen or marines of the private armed vessels of the | 
United States, and the regulations prescribed that, “A captain 
was allowed, not exceeding twenty dollars; lieutenants and sailing- 
masters, twelve dollars; marine officers, boatswains, gunners, car- 
penters, masters’ mates and prize-masters, ten dollars; all other 
officers, eight dollars, and the seamen or marines, six dollars per 
month, for the highest rate of disability, and in proportion for 
inferior disabilities.” 


4. Growth of the Military and Naval Pension System. 


By 1833 the pension roll had gradually increased to what for 
the time were considerable proportions and a Pension Bureau was 
established in the War Department, but the naval pensions con- 
tinued to be dealt with until 1840 by the Navy Department. In 
1849, when the Interior Department was created, the Pension 
Bureau was transferred thereto and since then all matters relating 
to military and naval pensions have been dealt with by the Com- 
missioner of Pensions of the Department of the Interior. 

The amounts annually paid out for military and naval pensions 
in the United States by 1791 had reached $ 175,813.88, but sub- 
sequent to that year the amount gradually declined, with some 


I) SEYBERT’s Statistical Annals of the United States, p. 694. 


Hoffman. American Public Pension Systems. 5 


regularity, to $ 69,656.06 in 1815. The effect of the second war 
with England was to nearly treble this amount during 1816, and 
the amounts rapidly increased until a maximum of $ 3,208,370.31 
was attained in 1820. Thereafter the amounts decreased slowly to 
a minimum of $ 850,573.57 in 1828, increasing rapidly thereafter 
to $ 4,589,152.40 in 1833. For the next three decades, including 
the second year of the Civil War, the amounts disbursed on account 
of military and naval pensions rarely exceeded two million dollars, 
and in fact, by 1862, the disbursements had been decreased to 
» 852,170.47. It may be recalled that the wars in which the United 
States had up to this time been engaged since the Revolution 
included the misunderstanding with France, the war with Tripolt, 
the Indian wars, the second war with England, dating from 1812 
to 1815, the war with the Seminoles, the several Indian wars dating 
from 1817 to 1843, the frontier disturbances on the Canadian 
border, and the war with Mexico, 1846—1848. 1) 


5. Changes in Pension Practice. 


It had become the practice to grant invalid pensions to volun- 
teers in the militia employed in suppressing Indian depredations 
in Florida and pension allowances were made to the widows and 
children under 16 years of age of those engaged in various Indian 
Wars since 1790 and who remained in the service to the date of 
their death, or who had received an honorable discharge and died. 
Invalidity pensions were also granted to regulars and volunteers 
disabled by injury received or disease contracted in the Mexican 
war, but the total amounts disbursed on account of military and 
naval pensions previous to the Civil War remained relatively an 
unimportant item in the national budget. As early as 1818, however, 
the principle of limiting the granting of pensions to cases of esta- 
blished disability in actual service had been abandoned and the 
length of service and the poverty or pecuniary dependence of the 
pensioner were made the conditions precedent for pension grants, 
which by the United States Supreme Court have been defined as 
“the bounties of the government which Congress has the right to 
give, distribute or recall at its discretion.” The effect of such a 
liberal interpretation of pension rules and regulations is made 


1) LALOR’s Cyclopedia of Political Science, Vol. III, p. 1031. 


6 Hoffman. American Public Pension Systems. 


evident by the subsequent cost, which, in nearly all cases has far 
exceeded the anticipated expense. 1) It would serve no present 
purpose to enlarge upon the abuses of the American pension 
system, which are common to pensions granted by government on 
a non-contributory basis. As early as 1818 it was ascertained that 
fully one-third of the pension claimants had no claim to the 
government bounty. In 1820 more restrictive safeguards against 
fraud were adopted and applicants were required to give a pro- 
perty account under oath and as the result of this six thousand 
names were stricken from the list. | 

The subsequent pension history is full of similar illustrations, 
but the actual extent of wrongful practices has never been esta- 
blished, nor would it be an easy matter to do so. The earliest 
reference to extensive pension frauds occurs in the Message to 
Congress of President ANDREW JACKSON in 1834 2) and on that 
occasion a report was made to Congress in which it was said 
that ,, [here are supposed to be now living about 42,600 persons 
who receive pensions or gratuities from the government under 
different laws. Of these about 3,900 are invalid pensions, 10,500 
come under the act of 1818, 7oo under the act of 1828, and 
27,500 under the law of June 7, 1832.” 


6. Beginnings of Civil War Pensions. 


The early pension experience of the United States is extremely 
suggestive of the difficulty inherent in all government pension 
plans which allow more or less discretion in the gratuitous distri- 
bution of public funds. The exigencies of war rarely fail to impose 
a heavy pecuniary burden upon subsequent generations, but in no 
direction has this been more the case than in the pension allow- 
ances authorized by the United States Congress subsequent to 
the war of 1861—18065. The earliest pension law having reference 





1) That there has been no improvement in the accuracy of forecasts regarding 
the ultimate cost of pension legislation, is made evident by a statement made by 
the Hon. Martin Dies, M. C., of Texas, on December 9, 1911, who, quoting from 
a speech by Mr. Payne, of New York, at one time the leader of the Republican 
majority of Congress, and referring to a proposed pension bill pending at the time, 
which would have materially increased the pension disbursements, said as follows: 
“The estimate is for 451/,. million dollars. We have never had an estimate yet that 
was not exceeded by a good many millions of dollars’. 

2) Messages and Papers of the Presidents, Vol. III, p. 114. 


Hoffman. American Public Pension Systems. 7 


to the dependent survivors of that war was enacted on July 14, 
1862, and from that date to this a truly enormous mass of pension 
legislation has been enacted, both in the nature of general laws 
and private acts, with a constant tendency towards an increase 
in the government bounty and an enlargement of the scope of 
the pension system. Not one of the numerous acts which has been 
passed was based upon actuarial considerations, even in so far as 
to permit of a forecast with reasonable accuracy of the probable 
future cost. As a result, colossal pecuniary burdens have been 
assumed by the American people, which, while cheerfully borne, as 
a matter of patriotic pride, and in appreciation of the inestimable 
service rendered by the soldiers and sailors of the wars in which 
the United States has been engaged, constitute nevertheless an 
economic problem of the utmost national concern. From 
$ 15,450,549 paid in military and naval pensions in 1866, the 
disbursements by 1880 increased to $ 56,689,229, and to. 
$ 156,906,637 in 1893. Subsequent to that year (1893) there was 
a slight decline for a few years, until, as the result of additional 
legislation and the new burdens resulting from the war with Spain 
in 1898, the pension disbursements by 1909 reached $ 161,973,703. 
During the last two years the amounts have slightly decreased 
to $ 157,325,100 in 19it. All of the foregoing disbursements are 
exclusive of the cost of maintenance and expense. The number 
of pensioners increased from 126,722 in 1806 to a maximum of 
999,440 in 1902. Subsequent to that year there has been a gradual 
decrease in the numbers, but in 1911 the pension roll still con- 
tained 892,098 names. 


7. Total Amount Paid in War Pensions to Date. 


The total amounts that have been disbursed for pensions to 
soldiers and sailors and marines, their widows, minor children and 
dependent relatives on account of military and naval service in 
the several wars and in the regular service since the foundation 
of the government to June 30, 1911, approximates four-and-a-quarter 
billions of dollars. The details of this colossal government bounty 
are given in the following table: 1) 


1) Annual Report of the Commissioner of Pensions, Department of the Interior, 
Washington, IQII. 


VY 


8 Hoffman. American Public Pension Systems. 


Pension Disbursements of the United States on Account of the Several 
Wars and of the Peace Establishment, 1789—1911. 


War of the; Revolition (estimate) Gnas. 2 ells een $ 70,0C00,000.00 
War ol "1872 (Service! pension) iis see se ees > «64 By Oe. 
Indian«wars A(SErv1Ce, sPENSiony: o<., 5. bene ate epee ae 7 11,192,205.52 
War,with Mexico (service pension)... 2... :sgeums » 45,279,686.83 
Civil Wale ota = cath’ fle Ue” Cues ete ce ve ge a) ce ee 1» 3,985,719,836.93 
War with Spain and insurrection in Philippine Islands ,, 34,142,976.37 
Regular vestablighwvent we. Jets aa asc eee ae ». t¢2 7O5eo SaaS 
Unclassified. .:;4me .. GE: g teeeeeel aes a ee ene ea 16,488,147.99 


Total disbursements for pensions 1).... $ 4,230,381,730.16 


8. Excess of Actual over Estimated Cost. 


It is obvious from the preceding table that the subsequent cost 
of military engagements may exceed the original expenditures 
incurred during the period of active military operations. While the 
limits of the present discussion preclude adequate consideration of 
important details, it may be stated in this connection that the 
last Revolutionary pensioner died April 25, 1g11, and there are 
still 279 names on the pension rolls of the War of 1812, and 
7,621 names on account of the War with Mexico. It is also 
extremely significant that although the war with Spain was of 
very short duration and occurred as recently as 1898, there 
are already 28,490 names on the pension roll resulting from that 
war, including 23.383 invalids and 1,217 widows. 


9. Average Value of Pensions Paid. 


In the national pension legislation the principle has generally 
been followed to grant small pensions to large numbers rather 
than pensions sufficient in amount for comfortable subsistence to a 
small number of particularly deserving men. The average annual 
value of each pension paid during 1911 was only $ 173.56, being 
as high as $ 228.58 for pensions granted under general laws on 
account of service in the Civil War, and as low as § 128.47 on 
account of pensions granted as the result of the War with Spain. 
The average amounts, however, have tended rapidly to increase 





1) This total probably does not include the entire cost of administration. In 1911 
the total pension disbursements were $ 159,842,287, of which § 2,517,127 was on 
account of expenses of administration, or 1.57 %%. 


Hoffman. American Public Pension. Systems. 9 


and while during 1907 the average pension disbursement: was only 
$ 145.60, the same had increased to § 169.82 by 1909 and to 
$ 173-56, as previously stated, in 1gt1. It is further extremely 
significant, in this connection, that at the close of the fiscal year 
ending with June 30, 1911, 36,793 applications were pending for 
pensions, including one on account of the War of 1812 and 189 
on account of the Mexican War, 8,386 on account of the War 
with Spain, and 25,153 on account of the Civil War. The most 
important recent legislation 1). on the subject of pensions was 
enacted under date of April 19, 1908, under which pensions are 
granted at the rate of $12 per month to widows of persons who 
served go days or more in the Army or Navy of the United 
States during the Civil War and who were honorably discharged, 
without regard to their pecuniary condition, if they were married 
prior to June 27, 1890. Following this legislation 88,224 applications 
were filed for pension allowances under this law, and up to June 
30, 1911, the number of certificates issued thereunder had reached 
67,801. The tendency towards still more radical pension legislation 
is emphasized in the pensions granted by special acts during the 
3rd Session of the 61st Congress, when 3,586 persons were provided 
with pensions for variable amounts. Leaving out a relatively small 
number of pensions granted for sums ranging from $ 35 to $ 60 
a month, there were 1,116 pensions granted for $ 30a month and 
1,636 pension for $ 24 a month. The lowest amount granted was 
for $6 a month in four cases. The tendency of pension legislation 
would, therefore, seem to be in the direction of providing from 
$24 to $30 a month, and this conclusion is sustained. by bills 
recently introduced into the present Congress, providing for an 
increase in the case of a large number of outstanding pensions to 
a flat rate of $ 30 a month, or a dollar a day. 2) 


10. Range in Size of Pensions Paid. 


The range of pensions provided under general pension laws, 
according to the pension roll of June 30, 1911, was from a 
minimum of $2 a month to a maximum of § 108 a month. 
Merely by way of illustration, it may be. said that undef the 
act of February 6, 1907, there were 177,315 pensions granted 








1) That is, previous to January I, 1912. 
2) See Section 13a. 


10 Hoffman. American Public Pension Systems. 


for $12 a month, 110,370 pensions at $15 a month and 
69,097 pensions at $20 a month. It requires no argument to 
prove that an increase in the amount of pensions resulting from 
the Civil or earlier wars of the United States to a flat rate of $ 30 
a month would very largely increase in the pension burden, and no 
such change should be made without a qualified actuarial check 
upon the estimate of probable ultimate cost. 1) 


11. Zhe Legal Status of War Pensions. 


The foregoing outline of the American pension system hasreference 
only to military pensions, to which the same, for reasons previously 
pointed out, has practically been limited up to this time. Important 
legal and other considerations affect the operation of the system 
in actual practice, and it is necessary to state that by an Act 
of Congress dated December 21, 1893, the payment of a pension 
cannot be withheld or suspended without notice to the grantee of 
not less than thirty days. It has been argued, with some force, 
that the pension legislation of the United States is unconstitutional, 
in that no specific provision for such legislation is contained in 
the fundamental law of the land. The system, however, has been so 
firmly established and so large a number of pensioners are dependent 
upon its continuance that there is not even a remote possibility 
that any of the general pension laws enacted by Congress will 
ever be declared unconstitutional by the United States Supreme 
Court. While the Court has ruled that no pensioner has a vested 
legal right to his pension, it is nevertheless true that the pension 
legislation heretofore enacted has practically established the doctrine 
of perpetuity for the lifetime of the beneficiary. Granting, however, 
all that can be said in favor of Federal legislation as an evidence of 
liberality and considerate solicitude towards the nation’s defenders 
in time of war, and their dependent survivors, the system is inde- 
fensible in essential matters of detail, which violate some of the 
most important principles of insurance and economic science. 2) 


1) For a full account of the laws and regulations which govern Army and Navy 
pensions in the United States, see “Laws of the United States Governing the Granting 
of Army and Navy Pensions, together with the Regulations Relating Thereto”, by 
Jas. L. DAVENPORT, Commissioner of Pensions, Washington, 1912. 

2) Special Message from the President of the United States, Feb. 11, 1887, on 
_ the Dependent Pension Bill. 


Hoffman. American Public Pension Systems. bi 


12. Financial Consequences of Disregarding Insurance Principles. 


The importance of taking into account in pension legislation 
the elementary principles of insurance as conditioned by the law. 
of probability is best illustrated in a statement of the reasons which 
induced the late Mr. CLEVELAND, when President of the United 
States, to veto the dependent pension bill passed by Congress in 
1887. After pointing out that ‘it is sad but nevertheless true, that 
already in the matter of procuring pensions there exists a wide-spread 
disregard of truth and good faith, stimulated by those who as agents 
undertake to establish claims for pensions, heedlessly entered upon 
by the expectant beneficiary, and encouraged or at least not con- 
demned by those unwilling to obstruct a neighbor’s plans’, he 
directed attention to the fact that while cost in a matter of this 
kind should not be set against a patriotic duty or the recognition 
of a right, it requires to be considered that experience has demon- 
strated “that all estimates concerning the probable future cost of a 
pension list are uncertain and unreliable, and always fall far below 
the actual realization”. In continuation, Mr. CLEVELAND said. 


“The chairman of the House Committee on Pensions calculates that 
the number of pensioners under this bill would be 33,105, and the 
increased cost $ 4,767,120; this is upon the theory that only those who 
are entirely unable to work would be its beneficiaries. Such was the 
principle of the Revolutionary pension law of 1818, much more clearly 
stated, it seems to me, than in this bill. When the law of 1818 was upon 
its passage in Congress the number of pensioners to be benefitted thereby 
was thought to be 374; but the number of applicants under the act was 
22,297, and the number of pensions actually allowed 20,485, costing, it 
is reported, for the first year, $ 1,847,900, instead of $ 40,000, the esti- 
mated expense for that period. 

A law was passed in 1853 for the benefit of the surviving widows of 
Revolutionary soldiers who were married after January 1, 1800. It was 
estimated that they numbered 300 at the time of the passage of the act; 
but the number of pensions allowed was 3,742, and the amount paid for 
such pensions, during the first year of the operation of the act, was 
$ 180,000 instead of $ 24,000, as had been estimated’’. 


13. Limitations and Defects of the American System. 


In utter disregard of the evidence, statistical or otherwise, that 
the military and naval pensions system of the American government 
is faulty in theory and defective in practice, the new pension 
legislation is much along the same line as the old, witha constant 
tendency toward an increase in the pension burden, which vastly 


12 Hloffman. American Public Pension Systems. 


exceeds the corresponding amounts disbursed by other_civilized 
nations for the same purpose. This much, however, may be said, 
that while the amounts expended are enormous in their magnitude, 
it is nevertheless true that in a large number of really deserving 
cases scant justice has been done -to those who were most entitled 
to the grateful recognition of the nation for invaluable services 
rendered during time of war. The chief economic defect in the 
American system is that its benefits are distributed too widely 
and in too small amounts to be of real benefit to individual 
beneficiaries, while the number of those receiving adequate pensions 
for comfortable support during invalidity or old age is comparatively 
small. For economic and patriotic reasons, it would have been 
much better if a smaller number of pensioners had been more 
adequately provided for, than that the benefits should have been 
so widely distributed among nearly a million beneficiaries, with 
many of whom at least a moral right to and pecuniary need of 
the nation’s bounty may be a question of serious. doubt. 


13a. Proposed Pension Legislation for 1912. 


The most recent bill introduced in Congress (1912) in the matter 
of war pensions, entitled ‘An Act (H. R. 1) granting a service 
pension to certain defined veterans of the Civil War and the 
War with Mexico’, reads as follows: 


“Be it enacted, etc., That any person who served in the military or 
naval service of the United States during the late Civil War or the War 
with Mexico, and who has been honorably discharged therefrom, and all 
members of State organizations that are now pensionable under existing 
law, shall upon making proof of such facts according to such rules and 
regulations as the Secretary of the Interior may provide, be placed on 
the pension roll and be entitled to receive a pension as follows: For a 
service of go days or more in the Civil War, or 60 days or more in the 
War with Mexico, and less than 6 months, $ 15 per month; for a service 
of 6 months or more and less than 9 months, $ 20 per month; for a 
service of g months or more and less than 1 year, $ 25 per month; for 
a service of 1 year or more, $ 30 per month: Provided, That any such 
person who served in the War with Mexico shall be paid the maximum 
pension under this act, to wit, $ 30 per month. 

Sec. 2. That any person who served in the military or naval service 
of the United States during the Civil War and received an honorable 
discharge and who was wounded in battle or in the line of duty, and is 
now unfit for manual labor, through causes not due to his own vicious 
habits, or who from disease or other causes incurred mm line of duty 
resulting in his disability is now unable to perform manual labor, shall be 


Hoffman. American Public Pension Systems. 13 


paid the maximum pension under this act, to wit, $ 30 per month, 
without regard to his length of service. 

Sec. 3. That no person shall receive a pension under any other law 
at the same time or for the same period he is receiving a pension under 
the provisions of this act. 

Sec. 4. That rank in the service shall not be considered in applications 
filed hereunder. 

Sec. 5. That pensions under this act shall commence from the date 
of filing the application in the Bureau of Pensions after this act takes effect. 

Sec. 6. That no pension attorney, claim agent, or other person shall 
be entitled to receive any compensation for services rendered in presenting 
any Claim to the Bureau of Pensions, or securing any pension, under this act. 


The estimated additional cost resulting from this bill on the 
basis of the pension returns as of June 30, Ig10, Is given in 
tabular form below: 1) 









































ee ees fs erp rol tet 
Service. OD patie per Month.| per Month.| Pensioner. | Pensioner. pen Neat. 
go days 22,253 | $ 12.00 | $ 15.00 | $ 3.00] $ 36.00] & 801,108.00 
6 months Se 02400y 12500. a 20,00 1%. ,00.| » *96.00 | » -5,340,708.00 
I year 200,279 | » 12.00 | » 30.00 | » 18.00 | » 216.00 | » 43,260,264.00 
go days SiGe 2 tA BOO Poel 5.00: |. do T2000) 3°. 12.00 7» 9,828.00 
6 months 2047 Ae duIAL OO) 1) 20°.00'| 99 600°!» 72.00 | » 147,384.00 
I year WG 7O weal ds O09}. 640-0024)». EO. 00% | > 192.00} >» — 1,415,040,00 
6 months 20,356 | » 15.00 | » 20.00] » 5.00] » 60.00 | » -1,221,360.00 
I year 73,280 | » 15.00 | » 30.00 | » 15.00 | » 180.00 | » 13,190,400.00 
6 months SOO LE Stl 7,00 Vue 20.00%! 9) 0 2.005 |. 30.00. | > 201,636.00 
year 20,105. |.» .17,00°| > 30.00 ]-> 13.00.} 2156.00 | » 3,145,740.00 
I year 47,349 | » 20.00 | » 30.00 | » 10.00 | » 120.00 | » 5,681,880.00 
I year 17,451 | » 24.00 | 30,00715)) 0,00 |) 5.72.00 [sow 1-250,472, 00 
otal; os $ 75,671,880.00 


It is further estimated that if the bill referred to became a law, 
the per capita increase of the pension burden would be from $ 1.77 
at the present time to $2.25. For the purpose of emphasizing 
the disproportionate amount paid in war pensions in the United 
States, the Hon. DAvipD E. FINLEY, of South Carolina, on 
December 11, 1911, made the following statement in the House 
of Representatives: 


1) Congressional Record, 621d Congress, 2nd Session, p. 146. 


14 Hoffman. American Public Pension Systems. 


“The United States pays out annually more for pensions than any 
other three countries in the world, as may be shown by the following — 
figures taken from the official yearbooks of France, Germany, and England: 


Pensions paid in 1910: 





Daye H BATUCO NS, pt ces sme genee: fe Fe Wee ees - $ 31,960,607 
Bye eriiany ae. ee ees eee ae oli wae eae » 40,805,814 
By England’ (cease ee te eee eee cre > 29,397,268 
aaa lotenh eter A $ 102,163,689 

Paid by United States in tg10, as given 
by the Commissioner of Pensions..... $ 162,631,729 


The bill, as proposed, passed the House by a large majority, 
but it has not passed the Senate, and in any event, it would 
probably have been vetoed by the President. The bill, however, 
has the intrinsic merit that it clearly recognizes the principle of 
length of active service as the paramount consideration in the 
granting of pensions with or without an age qualification. 


14. Payment of Pensions to Soldiers of the Confederacy. 


In addition to the Federal pension system, which provides for 
invalid or dependent survivors of the various wars in which the 
nation has been engaged, the Southern States constituting the old 
Confederacy, have established State pension systems along very 
similar lines, although the average amounts provided out of State 
revenues have necessarily been much less. While it must be 
admitted that the Confederate pension system reflects most credi- 
tably the devotion and gratitude of the Southern people towards 
those who fought in behalf of the Southern cause, it is equally 
true that by disregarding the bitter lessons of past experience and 
some of the elementary principles of insurance, the Southern 
States made economic errors almost identical to those committed 
by the nation at large. 1) Approximately 100,000 Confederate 
pensions have been granted to date by the several Southern States, 
involving annual expenditures of more than $5,000,000. In Georgia, 
for illustration, in 1906, there were 15,297 Confederate pensioners, 
to whom was paid the sum of $907,747, or an average pension 
of $59.34. Of the pensioners only 2,833 were disabled soldiers, 
2,551 were widows, because of the death of the husband being 


1) Industrial Insurance in the United States, by Chas. R. HENDERSON, p. 281 
et seq., Chicago, 1909. 


Hoffman. American Public Pension Systems. 15 


of service origin, 7,734 were indigent soldiers and 2,210 were 
indigent widows of soldiers. In the State of Georgia, and probably 
to a similar extent in other Southern. States, the Confederate 
pension system has been subject to serious abuses, much the same 
as those common to the Federal pension system, and, for illustra- 
tion, in 1902 the Georgia Commissioner of Pensions said in his 
report, ‘“The pension rolls under existing laws are being burdened 
with men who never saw the enemy and in many instances, 
deserters. To allow such is a disgrace to the soldier and the 
State and it is fastening upon the State a class of unworthy 
beneficiaries’. As an illustration of the extremes to which advocates 
of liberal and indiscriminate pension legislation will go, it may be 
stated that it is only a few years since that Senator Butler of 
North Carolina, by an amendment to the pension appropriation 
bill of the year proposed to extend to Confederate soldiers all 
the privileges of the pensions then enjoyed by Federal soldiers or 
their surviving dependents. As a contribution to the literature of 
the subject, I cannot do better than quote the following extract 
from the amendment referred to, which reads: 


“That from and after the passage of this bill every pension law now on 
the statute books shall apply to every invalid soldier, widow, minor children, 
dependent relative, the army nurses, and all other pensioners who may 
be able to prove their claim under the present pension laws, without 
regard to whether said soldier was enlisted in the Federal or Confederate 
service of the late civil war of 1861—’65”. 


Had this amendment been adopted, an additional amount of 
over one hundred million dollars would have been added to the 
pension budget, but it is hardly necessary to state that the suggested 
amendment, for patriotic and other reasons, failed to become a 
law. It may also be said that the proposed amendment did not 
reflect the consensus of qualified public opinion in the Southern States, 
where patriotic pride in the valor of the Southern Confederacy 
has not yielded to sordid pecuniary considerations, nor is it to 
be expected that it ever will. 


15. Proposed State Pensions for Civil War Veterans. 
Efforts have been made in the Northern States to provide from 


State revenues additional pensions for the survivors and their 
dependents of the Civil War but heretofore such attempts, with 


16 Hoffman. American Public Pension Systems. 


few exceptions, have fortunately been unsuccessful. Efforts have 
also been made and bills to that effect have been introduced into 
the United States Congress, to provide pensions for surviving 
slaves, liberated in 1863, as the result of the war between the 
States, but, fortunately, this attempt at an enlargement of the 
scope of the national pension legislation has also been unsuccessful. 


16. Proposed Pension Plan of the United States 
Sanitary Commission. 


Before I proceed with the discussion of other pension systems, 
I may briefly refer to two important reports made during the 
time of the Civil War, in anticipation of subsequent pension 
legislation. As early as 1863 the United States Sanitary Commission 
had a report prepared by Mr. STEPHEN H: PERKINS on the Pension 
Systems and Invalid Hospitals of France, Prussia, Russia, Austria 
and Italy, with some suggestions upon the best means of providing 
in a similar manner for the invalid and disabled soldiers of the Civil 
War. This report was followed by an outline of a_ system 
for the economical relief of disabled soldiers and on certain 
proposed amendments to the pension laws, by JOHN ORDRONAUX, 
published in 1864. These reports contain some very interesting 
suggestions, particularly with regard to a scale of disabilities by 
which invalid pensions should be classified. Among the specific 
recommendations, however, which may here be restated, is the 
first, which provided that ‘All non-commissioned officers and 
privates, serving in the Army for twenty-five years, should be 
entitled to the full pension of their rank, just as if they had been 
honorably discharged from the service at any time on account of 
wounds or disease contracted in the line of their duty”. The 
pension was to be granted additional to any bounty given for 
enlistment and land grants bestowed at the expiration of the first 
term of service. Another proposition was that ‘Whenever. a 
specially meritorious action has been performed by a soldier or 
non-commissioned officer, a full pension shall be granted to him 
in addition to his regular pay’’. 

With regard to officers, it was provided that “Officers remaining 
_in the service twenty-five years should be allowed to retire on a 
pension equal to one-third of their original pay, and for each 
additional five years of service up to thirty-five, one-sixth more 


Hoffman. American Public Pension Systems. 17 


shall be added, so as to enable it to reach, but never exceed, one-half 
of their original pay”. Finally, it was provided that, “Pensioners 
shall cease to draw their pensions whenever they obtain a life 
office in the public service with pay equivalent to the pensions”. 


17. Homes for Disabled and Invalid Soldiers. 


None of these recommendations was carried into effect, but 
soldiers’ homes were established, partly on the basis of other 
suggestions, however, and these in course of time have been 
increased in number, until quite a proportion of the really invalid 
and dependent soldiers and sailors of the Civil War are adequately 
taken care of in this manner. A United States Military Asylum, 
or Soldiers’ Home, had been established at Washington as early 
as 1851, but the new institutions were modeled along somewhat 
different lines, which in course of time have been materially 
modified, particularly with regard to public entertainment, hospital 
care, etc. Inmates of these institutions may draw their pensions and 
dispose of them as they see fit, since the provision for their care and 
comfort is entirely adequate and additional to the pension and has no 
reference thereto. Serious abuses have resulted from this system, 
which also has become one of very considerable expense. In 1911 
there were 33,301 veterans cared for in national homes for disabled 
volunteer soldiers and sailors, maintained at a cost of $ 3,841,786. In 
addition thereto 21,312 veterans were cared for in 31 institutions, 
maintained at the expense of 27 different states. During 1911 these 
institutions however, received $ 1,221,635 from the Federal govern- 
ment for the assistance and support of Federal veterans and 
pensioners. A Soldiers’ Home is also maintained in the District of 
Columbia by means of deductions from the pay of the soldiers of the 
regular Army, and during 1g11 there were 1,379 soldiers cared for 
at an expense for maintenance of $ 460,334. This expense, of course, 
requires to be taken into account in any consideration of the total 
pension burden borne by the people of the United States at the 
present time, on account of the various wars in which the nation 


has been engaged. 


17a. Service Retirements in the United States Army and Navy. 


Limitations of space preclude a full discussion of the system of 
retirement allowances in the Army and Navy and United States 


18 Hoffman. American Public Pension Systems. 


Marine corps. In brief, it may be stated that the laws for retirement 
in the military service provide that‘‘ If an officer has had 30 years 
service and applies for retirement, or if he has reached the age 
of 62, he may be placed on the retired list. If an officer has 
oeen on the Army register for 4o°years and applies for retirement, 
or if he has reached the age of 64, he shall be retired from 
active service. An officer may also be retired on account of dis- 
ability contracted in the line of duty. A similar rule governs the 
retirement of enlisted men of the Army who have served as such 
for 30 years. The retirement allowance of officers and enlisted 
men is 75 °/) of the pay of the rank held at the time of retirement. 
In addition thereto enlisted men have an allowance of $9.30 
a month for commutation of clothing and rations and $6.25 
a month in lieu of quarters, fuel, and light. The Army laws and 
regulations govern retirements in the Marine corps. The rules for 
retirement in the Navy are more involved and are governed partly 
by the exigencies of the service. The pro-rata allowance is three- 
fourths, or the same as in the Army. In this connection, however, 
it may be stated that the regulations of the Navy provide that 
“Whenever any officer, seaman, or marine, entitled to a pension, 
is admitted to the Naval Home, Philadelphia, or to a naval 
hospital, his pension, while he remains there, shall be deducted 
from his account and paid to the Secretary of the Navy for the 
benefit of the fund from which such home, or hospital, respectively, 
is maintained”. On December 1, 1910, the number of retired 
United States Army officers was 1,009 and the number of retired 
enlisted men of the Army 3,096. In November, 1910, the number 
of officers on the retired list of the Navy was 861, and there 
were also 55 officers on the retired list of the Marine corps, the 
total number of retired enlisted men of the Navy being 294. 


18. Pension Plans for Civil Service Employees. 


It was only natural that under the conditions briefly outlined 
in the foregoing discussion, a demand should arise for the pen- 
sioning of employees in the Civil Service, or otherwise in the 
employ of the Federal government. Since the number of govern- 
ment employees is on the increase and particularly the proportion 
of employees of ages sixty and over, when their usefulness has 
become more or less impaired, the demand for civil pensions rests 


# 


Hoffman. American Public Pension Systems. 19 


in part upon sound considerations of an efficient and economical 
public administration. Obviously, the retention of old and worn-out 
employees for humane or other reasons on the pay roll of the 
Government is equivalent to the grant of a pension, unless full 
service is rendered for the compensation paid. That this is 
not the case is a matter of everyday experience and numerous 
investigations into the subject have conclusively shown that the 
efficiency of the service as a whole is materially impaired by 
retaining on the pay roll of the Government superannuated and 
more or less physically or mentally disqualified employees. Recog- 
nizing the evil referred to, recommendations have been made from 
time to time by Cabinet officers and heads of departments, sug- 
gesting the establishment of a retirement system for superannuated 
civil service employees, and numerous bills have been introduced 
into the United States Congress for this purpose. 1) It was early 
recognized, however, that the people of the United States would 
not readily submit to the establishment of a straight, or non- 
contributory, pension system, even in the case of superannuated 
employees, or at least, say, such as had attained the age of seventy 
or over. Dividing the consideration of the subject into the class 
of employees within the superannuated period and those still 
outside of that period, it becomes clear that no system adopted 
could be applied equally to the two groups. It has been pointed 
out in the discussions upon the subject that the opportunity on 
the part of the superannuated class, say sixty-five and over, for 
making adequate provision for their old age had passed and that 
whatever plan was adopted required to make provision for this 
class as a matter of charity, justice and economy. For the other 
class, that is, those say under sixty-five, it is admitted that a 


1) In his message to Congress on the financial condition of the Treasury, on 
December 21, 1911, President Tarr referred to the proposed civil retirement and 
contributory pension system} as follows: 

“T have already advocated, in my last annual message, the adoption of a civil 
service retirement system, with a contributory feature to it so as to reduce to a 
minimum the cost to the Government of the pensions to be paid. After considerable 
reflection, I am very much opposed to a pension system that involves no.contribution 
from the employees. I think the experience of other governments justifies this view ; 
but the crying necessity for some such contributory system ; with possibly a preliminary 
governmental outlay, in order to cover the initial cost and to set the system going 
at once while the contributions -are accumulating, is manifest on every side. Nothing 


will so much promote the economy and efficiency of the Goverment as such a system”. 


\ 


BO. ei Hoffman. American Public Pension Systems. 


contributory system alone would ‘tend to solve the problem of 
adequate support in old age and retirement for the good of the 
service. In the earlier discussions insurance and actuarial principles 
were disregarded, but within the last few years the problem has 
been placed on a sound foundation as the result of a most pains- 
taking and thoroughly qualified inquiry into the whole subject by 
Mr. HERBERT D. BROWN, whose report on the “Savings and 
Annuity Plan Proposed for Retirement of Superannuated Civil 
Service Employees’ was published as a Senate Document in 
1911. 1) The report was called for by a number of pending bills 
providing for such retirement, and it is not going too far to say 
that the argument and facts advanced by Mr. BROWN constitute 
one of the most conclusive illustrations of the practical utility of 
actuarial principles applied to the public pension problem in the 
United States. 


19. Proposed Retirement Plan for Superannuated and 
Disabled Civil Service Employees. 


A brief outline of the plan at present under consideration by 
the Congress of the United States, but subject to more or less 
modification in matters of detail, is as follows: 


Part I of the plan proposes that each employee in the classified civil 
service shall, on reaching the age of retirement, receive an annuity equal 
to 13 per cent of his salary for each year of his service, or, as it may 
be differently stated, an annuity equal to 13 per cent of the total compen- 
sation received by him during his entire service. The theoretical basis 
of this provison is the assumption that three-quarters pay, or 75 percent 
of his average salary, is a reasonable annuity for a person who has given 
his entire working life — that is about 50 years — to the service. Dividing 
75 per cent by 50 years of service, 14 per cent for each year of service 
is obtained as a basis for computing annuities for any period of service. 
The annuity is created by the employee himself, who is required to set 
aside during each month of his continuance in the service a sum sufficient 
with compound interest, at 33} per cent, to create that annuity at the age 
of retirement. These deductions from salary represent no fixed percentage 
of salary, but vary with the age of entrance into the service, ranging in 
the case. of employees to be retired at the age of 70 from 4.3 per cent 
for the individual who enters the service at the age of 20 to 11.2 percent 
for the individual who enters at the age of 69. The amount deducted 
remains constant throughout the years of service, except in case of promo- 
tion or demotion, when it is increased or decreased accordingly on the . 
basis of the employee’s attained age. Each employee thus sets aside the 
amount of money necessary to create his own annuity only, without regard 


1) Senate Document 745, 61st Congress, 3rd Session, Washington, January 
10, 1911, 


Hoffman. American Public Pension Systems. 21 


to the deposits of others, so that each one shall receive full return on the 
money which he thus accumulates. The funds necessary for the payment of 
the annuities are therefore furnished by the employees themselves, without 
expense to the government, except that involved in the administration of the 
fund. The scheme is virtually a compulsory savings arrangement with the 
requirement that the savings in each case be sufficient for the purchase of an 
annuity at the age of retirement equal to 11/. per cent of the aggregate salary”. 


It is further provided that, 


“On reaching the age of retirement, the employee may take his savings 
in one of three ways: in an annuity payable quarterly throughout life ; 
in a smaller annuity payable quarterly throughout life, with the provision 
that in the case of the death of the annuitant before he has received in 
annuities the amount of his savings, plus the interest credited thereon, 
the balance shall be paid to his legal heirs; or in one sum. The age of 
retirement varies, the service being divided for this purpose into three 
groups, the first group consisting of railway postal clerks who may retire 
at age 60, the second group consisting of letter carriers to be retired at 
age 65, and the third group comprising all the remaining branches of 
the service and to be retired at age 70”. 


20. Essentials of the Contributory System. 


The recommendation of the government guarantee of 3} 9/p 
interest on the savings of the employees, is considered a minimum 
requirement, for it is held by the author of the report that ‘‘The 
Government could well afford to guarantee at least 4 %/) and 
probably 5 %%’’, as provided for in at least one of the bills which 
have been introduced into Congress for the purpose of establishing 
a retirement: plan for superannuated civil service employees. With 
regard to Part II of the plan, which has reference to the employees 
now in the classified civil service, it is provided that on attaining 
tamace. 70 they shall receive: an annuity equal to 14 % of the 
salary received for each year of service prior to the passage of the 
bill, but from that time on the employees shall provide their own 
annuities, as arranged for in Part I of the plan. In explanation 
of this plan, it is said that, among other reasons, considerations 
of justice and humanity dictate that provision be made for those 
already superannuated in the service and those so near super- 
annuation as to lack time to accumulate, through their own savings, 
a sum sufficient to give them an annuity on retirement; and 
furthermore, that the lack of some such provision for compensation 
for past services would delay the full benefit to the government 
under the plan proposed for a period of about 40 years, or until 
the majority of those now in the service had passed away. 


iy 


2a Hoffman. American Public Pension Systems. 


The estimated amount of the total maximum sum required for 
putting into effect the gratuity provision of the plan provided for 
was $ 66,985,778, or about $ 725,000 in the first year, increasing 
gradually and reaching a maximum of $ 1,746,561 about 30 years 
after the passage of the bill. This calculation, however, has sub- 
sequently been materially modified on account of the inclusion of 
a large number of additional employees, who, it is held, ought to 
be brought within the scope of the law and on the new basis the 
total maximum sum required to pay gratuitous annuities for past 
services, would be §$ 130,581,273, or about $ 1,120,000 the first 
year, increasing gradually and reaching the maximum of $ 3,495,000 
about 28 years after the passage of the bill and then dropping 
off gradually to nothing by the time all the present employees had 
died. These estimates are considered extremely conservative, 
since no allowance is made for the savings of annuities for past 
services that will arise from resignations before the age of 
retirement, which, it is held, may be safely estimated to equal 
the mortality, and furthermore, because they are based on present 
salaries instead of average salaries and finally, because they make 
no allowance for the retention of employees in the service past 
the age of retirement. 


21. Actuarial Considerations of Retirement Plan. 


In defense of the plan four fundamental principles are advanced 
by the author of the report, briefly stated as follows: 


1. The funds necessary for the payment of annuities on services 
rendered after the adoption of the plan should be supplied by the 
employees themselves, without expense to the Government other than 
possibly the payment by the Government of a reasonable rate of interest 
on the money held by it and the payment of salaries to the clerical force 
required to keep the accounts and distribute the funds. 

2. Each employee should set aside the amount necessary to create 
his own annuity, w¢/hout regard to the deposits of others, so that each 
employee may receive full return on the money set aside by him. It is 
important that the amount set aside should be sufficient to buy an adequate 
annuity, else the condition of the superannuated employee will be little 
improved, and the aid of the Government ultimately be solicited. 

3. The annuities to be paid employees on retirement should be 
graduated according to length of service and amount of salary and in 
such manner that the monthly deposits required from employees for the 
creation of such annuities shall be in no case excessive. 

4. The fund necessary for the payment of annuities on services 
rendered prior to the adoption of the plan should be paid by the Govern- 
ment rather than by any form of tax upon the younger employees”. 


Hoffman. American Public Pension Systems. 23 
22. LEstimated Cost of Proposed Retirement System. 


This statement of principles is followed by a discussion of non- 
contributory civil service pensions, which are stated to be unpopular in 
practice and unsound in theory, as well as extremely expensive. 
The discussion of this phase of the pension problem is most 
timely, and some of the most valuable conclusions are drawn from the 
civil service pension plans of England, New South Wales, and other 
countries. A statement is supplied to show that the total cost of 
gratuitous civil service pensions conferring the same benefits as provided 
for in the proposed plan at present under consideration, if payable 
entirely out of the public treasury would amount to $ 232,773,000 
during the next 35 years, as contrasted with the cost to the 
Government of the bill proposed for the same period, of $ 73,136,165. 
Referring to the long-established practise of granting military and 
naval pensions without regard to insurance or actuarial considerations, 
it is well said that, 


“Instead, however, of the practice regarding the pensioning of officers 
of the Army and Navy being taken as a model for the civil service, it 
may even be questioned whether the pensioning of Army and Navy 
officers might not be wisely remodeled on the basis here proposed for 
the civil service, with the addition of a provision for special recognition 
in the matter of retiring allowances in the case of those officers who 
actually go into battle.” 


23. fallacies of Non-Contributory and Flat Rate 
Assessment Plans, 


Without further enlarging upon the conclusion that straight or 
non-contributory civil pensions would be demoralizing to the civil 
service in much the same manner as the present system of military 
pensions has been demoralizing to the public service at large, the 
report includes an extended discussion of the difference between 
Government service and private business, followed by a careful 
consideration of the technical details of alternative pensions and 
retirement plans, which, of course, cannot be discussed in detail on 
this occasion. As emphasizing, however, the inequitable nature of 
uniform annuities regardless of length of service, it is pointed out that, 

“Suppose it is desired to retire all employees receiving $ 1,200 salary 
on three-quaters pay, or $900 a year. The value of a life annuity of 


$900 a year, beginning at age 70, first payment in three months after 
reaching that age, may be stated as $6,835.50 ‘Toaccumulate $ 6,835.50 


24 Hoffman. American Public Pension Systems. 


during a service of 50 years requires a monthly deduction from a monthly 
salary of $100 of but $4.27, if the deductions are improved by 3'/s per 
cent compound interest. That is all the man beginning at age 20 would 
have to set aside each month. But, on the other hand, to accumulate 
$ 6,835.50 during the last ten years of service of a man who entered the 
service at age 60, or who was already 60 years of age when the plan 
was put into operation, would require a deduction from a salary of $ 100 
a month of $47.65, or 47.65 per cent — an impossible deduction under 
any circumstances. To make this plan practicable it is therefore necessary 
to decide upon a per cent to be deducted from all salaries which shall 

e sufficiently large to accumulate not merely annuities for those entering 
the service at an early age, but-also to provide the amounts that the older 
men lack to retire themselves on the same annuity’. 


24. Important Advantages of the Contributory Plan of 
Service Retirement. 


The argument in favor of the bills proposed for the retirement 
of superannuated civil service employees is summed’ up in the 
statement that such a plan “is self-sustaining, making no demand 
on the Government beyond the guaranty of a reasonable rate of 
interest on the money held by the Government and the expense 
of administering the plan. It will improve the service by putting 
into the hands of administrative officers power to remove the 
incompetent and superannuated. It will benefit the employee by 
stimulating his independence and self-respect while he is in office 
and by retiring him on a competence when he reaches old age. 
And it is as simple in its operation as a straight pension itself”. 

The fundamental provision of the bills introduced for the purpose 
of providing for the retirement of superannuated civil service 
employees of the United States reads as follows: 


“That beginning with the first day of July next following the passage 
of this act there shall be deducted and withheld from the monthly salary, 
pay, or compensation of every officer or employee of the United States 
to whom this act applies an amount, computed to the nearest tenth of a 
dollir, that will be sufficient, with interest thereon at three-and-one-half 
per centum per annum, compounded annually, to purchase from the 
United States, under the provisions of this act, an annuity, payable 
quarterly throughout life, for every such employee on arrival at the age 
of retirement as hereinafter provided equal to one and one-half per 
centum of his annual salary, pay, or compensation for every full year of 
service or major fraction thereof between the date of the passage of this 
act and the arrival of the employee at the age of retirement. The 
deductions hereby provided for shall be based on such annuity table as 
the Secretary of the Treasury may direct, and interest at the rate of 
three-and-one-half per centum per annum, compounded annually, and 
shall be varied to correspond to any change in the salary of the employee”. 


Hoffman. American Public Pension Systems. 25 


It is made clear by this provision that the correct conception 
of an annuity is the central idea of the plan and that all of the 
essential. actuarial principles are properly applied and, in the cal- 
culation of the cost of the proposed plan due consideration 1s given 
to the principles which underlie modern insurance practice. Since 
this has been the case for the first time in a U. S. government measure 
of such transcending importance as a national plan for the retire- 
ment of superannuated civil service employees, the author of the 
report properly explains the four essential elements of the actuarial 
theory upon which the plan is made to rest, that is, the mortality 
tables, the interest factor, the principle of annuities, and the 
required percentage of salary reductions. The discussion in this 
respect is practically an elementary treatise on insurance and a 
most convenient as well as extremely useful contribution to the 
literature of the subject. — 


25. Actuarial Aspects and Principles of Administration. 


The limitations of the present discussion preclude further con- 
sideration of other important and interesting aspects of the pension 
or retirement problem of civil service employees, as set forth by 
Mr. BROWN in the report referred to. It requires only to be said 
in conclusion that he has taken into account every essential factor, 
including disability benefits, provision for retirement, provision for 
statistical records and cost of administration, aside from a statement 
in full detail of the cost of the proposed plan and the more 
important provisions for the investment of a retirement fund and 
the probable future course of the rate of interest. As previously 
stated, the report constitutes by far the most important contribution 
ever made to the technical discussion of the public pension problem 
of the United States and the author of the report is entitled to 
the gratitude of the nation for his painstaking effort, which must 
have involved a vast amount of labor, in which, however, it 
is but fair to say, he had the assistance of Mr. BENEDICT D. 
BEYNN, TF. A. S., «Hon. GEORGE E. ROBERTS, Director of the 
Mint, and of Mr. FRANK J. F. THIEL, Secretary to the Trea- 
surer of the United States. 


26 Hoffman. American Public Pension Systems. 


26. Teachers’ Pension Funds and Retirement Systems. 


While heretofore the problem of pensions or retirement allow- 
ances for employees in the civil service of the Federal Government 
has been confined to a theoretical discussion, except in so far as 
a few and relatively unimportant exceptions have elsewhere been 
noted, a more or less adequate provision of this kind has for 
many years been made for certain classes of municipal employees, 
chiefly teachers, policemen and paid firemen. These plans vary 
widely in matters of detail, but the majority require a contribution 
more or less insufficient in amount to provide the benefits payable 
in the event of disability, death or old age. Wi5th regard to 
teachers’ pensions it may be stated that, according to a recent 
government report on the subject: 1) | 


“Maryland, Rhode Island, and Virginia pension teachers out of State 
funds. In Maryland and Rhode Island no dues are paid; pensions are 
paid exclusively from State funds. In all the other States below the fund 
authorized by State law is mainly provided by teachers’ dues of from 
1 to 3 per cent of salary; the term of service is, with disability, from 
2 to 30 years; without, from 20 to 35 years; the annuity is from a 
minimum of $200 to six-tenths of salary at retirement. The maximum 
is from $2c00 to $1,500- $2,000 in New York. 

New York grants pensions to teachers in State institutions, and New 
Jersey requires local authorities to retire applicants after 35 years’ service. 
The school committee of Boston is required by law to provide a pension 
fund and to levy a tax therefor. 

Virginia has a State pension system, but the funds are derived princi- 
pally by deducting 1 per cent from the salaries of teachers, the State 
appropriating $5,000 a year. New Jersey also has, in addition to the 
law mentioned above, what might be termed a State system, inasmuch as 
a “retirement fund’’ is under the supervision of State officers, and contri- 
butions are obligatory upon new appointees, but the State appropriates 
only $ 3,000 a year to be used for administrative purposes. 

Massachusetts allows all cities and towns, other than Boston, to pay 
pensions from public funds, if approved at popular election; Pennsylvania 
authorizes cities of the second and third classes to establish retirement 
funds, and apparently to appropriate public money therefor ; and Minnesota 
provides that in cities of over 50,000 inhabitants, funds for retirement 
may be raised in part by taxation. In Ohio the board of education of 
any district may establish a pension fund; participation is optional with 
teachers, and the funds are to be derived in part from salary deductions 
and in part from the appropriation of from 1 to 2 per cent of the gross 
receipts of the said board from taxation. California and Utah have 
retirement laws which are similar inasmuch as they are local and voluntary 
in their application, and are based largely upon assessments, the only 





1/ Senate Document 823, 61st Congress, 3rd Session, ‘“Teachers’ Pension Laws 
in the United States and Europe’, printed under date of February 17, 1911. 


Hoffman. American Public Pension Systems. 27 


provision for contribution from public funds relating to certain amounts 
forfeited by teachers for absence, etc. In Colorado districts containing a 
school population of over 1,000 may establish public-school teachers’ 
retirement funds, and may levy therefor taxes not exceeding one-tenth of 
a mill, 

The teachers’ fund in Chicago, IIl., is based principally upon non-com- 
pulsory salary deductions, but the city must contribute the interest received 
upon deposits of school funds, not exceeding 1 per cent of the amount 
raised by taxation. 

A tax of 1 cent upon each $ 100 of valuation is required to be 
levied in Indianapolis, Ind., for the pension fund, but salary deductions 
are enforced also. In Milwaukee, Wis., participation in the fund is optional 
with teachers in service in 1907, but obligatory with new appointees; 
assessments are the principal sources of revenue, but the board of school 
directors may contribute not over 1 per cent of the gross receipts from 
school taxation”. 


27. Municipal Pension Funds for Firemen and Policemen. 


While the details of the various systems are of considerable 
interest, they cannot be discussed on this occasion, but it may be 
said that principally all of the plans have been established and 
are being carried forward in disregard of insurance principles and 
actuarial requirements. Much the same conclusions apply to pension 
funds for certain classes of municipal employees in the United 
States, regarding which also a recent government report has been 
prepared under the direction of Hon. CHAS. P. NEILL, the United 
States Commissioner of Labor. 1) This report presents an outline 
of 219 pension funds for municipal employees, being the principal 
systems or plans in operation in the United States for the payment 
of annuities to superannuated and disabled teachers, firemen and 
policemen, and others in the service of municipalities. It is pointed 
out in the report that during the last decade there has been an 
increased tendency on the part of municipalities to provide means 
by which superannuated and disabled employees may be retired 
from the service, and while various considerations enter into the 
framing of these retirement and pension systems, they are generally 
regarded as providing the means, more or less adequate, of reliev- 
ing the service of inefficient old employees, without inflicting a 
serious hardship upon them. Compensation is also provided in many 





1) Senate Document 427, 61st Congress, 2nd Session, ‘Pension Funds for Muni- 
cipal Employees and Railroad Pension Systems of the United States’’, prepared under 
the direction of Chas. P. NEILL, Commissioner of Labor, printed under date of 
March 14, 1906. See also 23rd Annual Report of the Commissioner of Labor, on 
Workmen’s Insurance and Benetit Funds in the U. S., Washington, D. C., 1903. 


28 Hoffman. American Public Pension Systems. 


instances for disabilities received in the performance of duty and 
these provisions are incentives and rewards for long, continuous 
service. The usual amount of the annual pension in the majority of 
funds is one-half of the employee’s pay at the time of retirement 
It is suggestive that almost every plan has been modified consid- 
erably since its conception and in some cases an entirely new 
scheme has superseded the original one. The majority of the plans 
are, however, of such recent date that their stability from an actu- 
arial standpoint has not been. established, and it is pointed out in 
‘the report that future annuitants may find their expectations not 
always realized “unless some changes are made as to the means 
of obtaining revenue and as to the conditions under which the 
annuities are paid.’ As far as it is possible to judge, actuarial 
advice has been practically disregarded in the establishment of most 
of the existing systems, although it is evident from even a cursory 
consideration of the subject that a due regard to actuarial principles 
is a prerequisite of ultimate stability and success. 


28. Principles and Practice of Municipal Pension Plans. 


In one-third of the 167 firemen and policemen funds the entire 
amount required for the payment of annuities is furnished by the 
municipalities, while two-thirds are supported in part by the con- 
tributions from the employees. In about 40 per cent of the condi- 
tions under which pensions are paid to firemen and policemen the 
sole requisite 1s permanent disability incurred in the performance 
of duty. In the remaining 60 per cent a specified length of service, 
usually about 20 years, is required, coupled in one-third of such 
funds with the additional requirement of permanent disability, and 
in another third with an age requirement of from 50 to 65. years. 
In about 40 per cent of the funds the employees are represented 
in the management. Among other details regarding the sources of 
revenue the following statement is of interest: 

“In New Jersey the state tax of 2 per cent on premiums received by 
foreign fire insurance companies is all applied to the relief of firemen 
throughout the State. In towns where there are pension funds those 
funds get one-half and the local firemen’s relief society gets the remainder. 
The relief societies provide for “exempt firemen” (members of the former 
volunteer fire companies) and for active firemen whose cases would not 
come under the provisions of the pension fund, and for the dependents of 
both. In New York a like tax and in Pennsylvania one-half of a like 


tax is applied to the relief of exempt and active firemen or their depen- 
dents in the localities in which the tax is collected”. 


Hoffman. American Public Pension Systems. 29 


29. Sources of Revenue for Municipal Pension Plans. 


The sources of revenue vary for the funds of the different states 
and it is evident from an examination of the facts in detail that 
no really sound or solvent system has as yet been developed, but 
that the existing plans are the result of necessity, guesswork 
Opinion and expediency. There can be no question of doubt but 
that an actuarial examination of the majority of the funds would 
disclose serious deficiencies in the sums accumulated to provide 
for future liabilities and among other pertinent illustrations of this 
lamentable situation the following statement may be quoted from 
a report regarding the police and firemen’s pension funds of the 
District of Columbia under date of May 10, 1g1t, reading that 
“You will notice that the deficit in the amount available is practi- 
cally $14,000 and still continues. This alone shows the necessity 
for the additional sources of revenue contemplated in the bill now 
before the Senate’. The proposed sources of revenue are quite 
varied and more or less uncertain in amount, and, in any event, 
badly adapted to the needs of so important a fund for the protection 
of the disabled and aged in an indispensable branch of the public 
service. 


30. Massachusetts Retirement Plan for Superannuated 
State and Municipal Employees. 


In recognition of the inadequacy of the existing systems of 
pensions or annuities for public employees, a carefully considered 
retirement system for such employees was recommended by the 
Massachusetts Commission on Old Age Pensions, Annuities and 
Insurance which reported in 1gto. Three bills were submitted by 
the Commission providing for the establishment of retirement systems 
for State, for County and for Municipal employees, respectively. 
All three bills were passed by the Legislature. The two acts 
providing for Municipal and County retirement systems are mercly 
permissive and have a referendum clause requiring action by the 
voters of the city or of the county before the system shall go into 
operation. No city or town in this State has yet adopted the 
Municipal Retirement Act. Two counties, Middlesex and Norfolk, 
have accepted the County Retirement Act. The State Retirement 
Act has no referendum, and the system went into operation Jan- 
Dany, Tt, 19.12. 


30 Hoffman. American Public Pension Systems, 


The system is based on the contributory principle, but subject 
to the limitation that the rate of assessment on wages or salaries, 
to provide a fund out of which annuities shall be paid, shall not 
be less than one per cent and not more than five per cent. An 
employee upon retiring under the provision of the Act receives an 
annuity of such an amount as his accumulated contributions will 
provide, and in addition a pension of the same amount paid from © 
the State Treasury. The age of voluntary retirement from the 
service is fixed at 60 years, but employees with a service record 
of 35 continuous years are permitted to retire, or to be retired, 
at any age. The participation in the retirement system is made 
optional with present employees, but obligatory for all future 
employees, that is, those entering the service after the establish- 
ment of the retirement system, with a few exceptions, which: are 
not of present importance. In addition to pensions or annuities 
for subsequent service, pensions for prior service are provided, 
that is, for employees in the service of the State or County on 
the date when the retirement plan goes into effect. Such employees 
under the plan “are to receive in addition to the pension which 
they may secure through their contributions to the annuity fund, 
an extra allowance equal to the amount of the annuity which they 
might have earned for themselves had the scheme been in operation 
when they entered the service and had they made contributions 
to the fund from that time in proportion to their current wages 
or salaries’. In this respect, therefore, the Massachusetts plan 
conforms to the principles laid down in the proposed savings and 
annuity plan for the retirement of superannuated civil service 
employees of the United States. 


31. JLllustrations of the Massachusetts Plan. 


Provision is made in the Massachusetts plan for refunding the 
contributions of employees who withdraw from the service without 
becoming entitled to a pension and the administration of the system 
is entrusted to a board of retirement, but the Insurance Department 
of the Commonwealth is given certain powers of supervision with 
reference to the actuarial and administrative features of the system. 
The management expenses are estimated to amount to only 
$ 20,000 a year. The amounts of retirement allowances, under 
given conditions, are illustrated as follows: 


Hoffman. American Public Pension Systems. 31 


‘‘A person entering employment at age 25, serving 35 years, at an 
average salary of $600, and retiring at age 60, would be entitled, on 
the basis of a one per cent rate of contribution, to an annuity of $ 32.38. © 
As this amount doubled by the pension would be less than the minimum, 
$ 200, fixed in the act, such a person would receive that minimum. On 
the basis of a five per cent rate, he would be entitled to an annuity 
of $161.90, which, doubled by the pension, would make a total annual 
allowance of $ 323.80”, 

Of course, a one per cent contribution would be insufficient, but 
the amounts receivable at different rates of contribution are easily 
calculated. What the exact details will be when the fund is in 
actual operation has not as yet been decided. As to what the 
ultimate cost of the system will be to the State, the various estimates 
are admitted to be more or less conjectural, since some of the 
fundamental elements, such as the number of employees who would 
elect to participate in the system, and the ages of such employees and 
their probable rate of retirement and mortality rate, are not subject 
to accurate calculation at the present time. In brief, the employee 
is to be given his choice of two kinds of annuities on retirement: 

“First, a life annuity payable monthly; second, a life annuity payable 
monthly, with the provision that in the event of the death of the 
annuitant before receiving payments equal to the sum of his deposits 
accumulated, with regular interest, at the date of his retirement, the 
difference shall be paid to his legal representatives. 7 addition Lo the 
annuity, the employee is to receive in each case a pension of equivalent 


amount paid from the public treasury. In no case is the total allowance, 
including annuity and pension, to be less than $200 per year”. 


32. Estimate of Cost of the Massachusetts Plan. 


Under this system it was estimated that on’a one per cent basis 
of contributions, the cost to the Commonwealth of Massachusetts 
for the first year of operation under one plan would be about 
$48,000. Since a one per cent basis is practically certain to be 
inadequate, the actual cost of operation would be greater. The 
details by which the estimates of cost were arrived at cannot be 
discussed on this occasion, but since the plan has gone into actual 
operation, the ultimate outcome of the experiment is one of interest to 
the actuarial and insurance profession generally of the United States. 


82: Massachusetts Military Aid and Pension Plan. 


A brief reference requires to be made here to the State and 
Military Aid and Burial Expenses incurred in behalf of Indigent 
Soldiers, Sailors and Marines, their Wives, Widows and Dependent 


32 Hoffman. American Public Pension Systems. 


Mothers, by the State of Massachusetts, during the year 1910. 
The disbursements are in amplification of the Federal pension 
system, for as early as 1861 a Soldiers’ Fund was established to 
provide aid in behalf of the families of soldiers called into service 
for the defense of the country. During’ 1909 the disbursements on 
this account were as follows: 


State and Military Aid and Burial Expenses, Massachusetts, 1909.1) 





State aid to soldiers and dependents, civil war.) :7- 205.4 $ 782,094.57 
State aid to soldiers and dependents, war with Spain...... » 6,042.00 
Military aid to soldiers and sailors, civil war.. .......... » 28,877.29 
Military aid to soldiers and sailors, war with Spain....... » 8,824.39 
Burial expenses of indigent soldiers and dependents..... -  » 33,969.00 

Total for,1000..-0 0... fase $ 859,807.25 


The total number of Massachusetts Civil War survivors and 
their dependents provided for in 1909 was 15,205, but of this 
number 7,555 were soldiers’ widows, 673 were soldiers’ wives, 
72. were widowed mothers of soldiers and 6 were army nurses. 
The average cost to the State per person aided was $ 51.43. The 
number of persons aided on account of the War with Spain was 
146 and the average cost to the State on this account was §$ 41.38. 
There were buried during the year 919 persons at the expense 
of the fund and at a total expense of $ 33,969 and an average 
expense per burial of $ 36.96. The following is a statement of 
the total payments of State Aid since 1861, up to December 1, 1910: 


Total Payments on Account of State Aid to Indigent Soldiers, 
Sailors and Marines, and their Dependents by the 
State of Massachusetts, 1861—1910. 


The total payments by the Commonwealth for State and 
military aid and burial of indigent soldiers and sailors, 
including appropriations made by the General. Court 
toward maintenance of the Soldiers’ Home in Massa- 





chusetts, from 1861 to the close of 1909, were...... $ 34,771,680.50 

State and military aid and burial of soldiers and sailors 
on account Of T9900, spaid ein: td taane. ee ee » 859,807.25 
special laws, 4QYOS ue) ys eee eaten. kf ere 2 RS Gees 
soldiers’ /Horhe, 19107 205 Ga eee ee »'.' 147,000.00 
Total to) ‘December i stoxOe, ve ras $ 355779,399-75 


34. Fudicial Retirement Allowances. 
About eight years ago the question of retiring Judgés of the 
State of New York attracted considerable attention on account 
of the bill providing for the retirement of Judges of the Supreme 





1) On account of 1909 paid in 1910. 


Hoffman. American Public Pension Systems. 33 


Court, which had passed the Assembly, but was defeated in the 
Senate, The bill provided that when any Judge of the Court of 
Appeals, or Justice of the Supreme Court, had attained to the 
age of 70, he should be retired from office, either by expiration 
or abridgment of his term, after having previously served as a 
Judge or Justice in any existing court of record in the State of 
New York continuously for more than 16 years, or who, having 
attained the age of 65 years and retiring voluntarily after a 
service of more than 20 years, or who, on account of permanent 
mental or bodily disability voluntarily retired from office, or was 
removed therefrom, after such service of more than 25 years 
continuously, should receive thereafter one-half of the salary 
he was receiving at the time of his retirement. It was provided, 
however, that should a pensioner accept any paid official position, 
his pension should be suspended during the incumbency of said 
position. The plan was modeled after the retirement plan of the 
Federal judiciary, established in 1869. This law is still in force, 
and as given in Section 260 of the Judicial Act of the United 
eiateemeteads that’ “When ‘any Judge of the United States, 
appointed to hold his office during good behavior, resigns his 
office, after having held a commission, or commissions, as Judge of 
any such court, or courts, at least ten years continuously, and having 
attained the age of 70, he shall, during the residue of his natural life, 
receive a salary equal to that payable at the time of his retirement 
for the office which he held at the time of his resignation”. On 
account of this provision for judicial service retirement allowances, 
the following sums have been disbursed during the period 1902-1911. 


Amounts Disbursed on Account of Retirement Allowances 


to 
Fudges of the Federal Fudiciary of the United States, 1902—1911. 
ree aANeevedt al QU ares, sp, 20M tas tans $ 42,912.51 
af ot PONTO Rees ON ai niheet eee acer ores minetes 7) 40,4-79.42 
+ PREC OOAE cp wrt eae ks 0s eT ONTO SiO 
‘f 4. HOTS Be ee tee enna 5» 87,905.55 
a Fete 1 KO018).. Era ee a een CR eS ea 5, 108,638.89 
ys Pitas TORT oan ees om soe ag De ten O2-7o 
" PMLCL OMe ad + stated ie eae vente 5, 110,850.00 
“f MME LOU Roetes. sicctetice a: « + scoters 5» 114,519.45 
” PEEL LOS fee ae eA), 2 ROR 5, 108,691.05 
Ky 2 SCO SU a es prey ore ee a », 118,050.95 





pLotalas sven 9 945,912.03 


34 MWoffman. American Public Pension Systems. 


The probable amount for the fiscal year 1912 will be about 
137,000. 


35. Suggestions for Universal Old Age Pensions. 


The first suggestion for a national system of universal non- 
contributory pensions is contained in a tract on ‘Agrarian Justice 
being a Plan for Meliorating the Condition of Man’, by THOMAS 
PAINE, the author of ‘The Age of Reason’, published in Paris, in 
1797. It was proposed in this plan to create a national fund “to 
pay to every person when arrived at the age of 21 years the sum 
of 15 £ sterling, and also the sum of 10 £& per annum, during 
life, to every person now living at the age of 50 years, and to all 
others when they shall arrive at that age’, to enable them ta 
live in old age without wretchedness and go decently out of the 
world. In defense of this plan, which would practically have been 
sustained out of the public revenues by means of special taxes, it 
was argued that it was ‘‘not a charity but a right, — not bounty 
but justice”, which would ‘benefit all without injuring any’. It 
would serve no practical purpose to discuss in detail the numerous 
propositions which have been made to establish a system or plan 
of universal old age pensions on a contributory or a non-contri- 
butory basis in the several states of the Union. Foremost in the 
public considerations of the subject, mention, however, requires to 
be made of a report by the Massachusetts Bureau of Statistics of 
Labor on Old Age Pensions, in 1905, which in 1907 was followed 
by the appointment of a ‘Commission on Old Age Pensions, 
Annuities and Insurance”, which, in 1909, published a final report. 
The conclusions of the Commission were adverse to the adoption 
of any plan of universal old age pensions, but a contributory 
retirement plan for State and municipal employees was recom- 
mended and subsequently, as previously stated, enacted into law, 
with a proviso that the same go into effect on January 1, 1912. 1) 


36. Recent Pension Bills Introduced into Congress. 


In 1909 a bill was introduced into the House of Representatives 
by WILLIAM P. WILSON of Pennsylvania, providing for the organ- 
ization of an Old Home Guard of the United States, for which > 


1) See Sections 30--32. 


Hoffman, American Public Pension Systems. 35 


the required qualifications were that any man or woman more than 
65 years of age and a resident of the United States for 25 consecutive 
years and a citizen for 15 consecutive years, and not having property 
valued at more than $ 1,500, or an income annually of more than 
$ 240, should receive from the Federal government a pension of $ 120 
a year. Nothing came of this proposition, nor of a similar plan intro- 
duced into Congress under date of February 18, 1909, by Senator 
HANSBROUGH “authorizing the issuance of annuities for old age 
for employees of the government and for such other persons as 
choose to avail themselves of the provisions of this act”. This 
would simply have provided a plan of post office annuities on a 
voluntary basis and at the entire expense of the contributors. In 
1910 Representative Coudrey of Missouri introduced a bill for the 
establishment of a national non-contributory pension system, but 
the bill did not become a law. Other bills of a similar nature 
have been introduced from time to time, but the present sentiment 
at least is decidedly adverse to the suggestion that the American 
nation follow the English plan and commit itself to a system of 
non-contributory old age pensions, with or without an income or 
' property qualification. 1) 


37. The New Fersey Old Age Pension Commission. 


On the part of the several States the subject has received further 
consideration and under date of April 22nd, 1911, an act was 
passed by the State of New Jersey, providing for the appointment 
by the Governor of a commission of five persons, to be known as 
the Commission on Old Age Insurance and Pensions. The purpose 
of the Commission is “to act as a Bureau of information and 
assistance for employers and employees, for associations of employers 
and. employees, and for municipalities and counties in the state, 
with a view to aiding and advising them regarding the establishment 
of systems of old age insurance and pensions and annuities’’. In 
rendering this service the Commission is expected to formulate 
plans and superintend their establishment in codéperation with the 
parties concerned and also to make such investigations regarding 
the operation of the pension and insurance and annuity system as 


1) See State Pensions and Annuities in Old Age, by FREDERICK L. HOFFMAN, 
Quarterly Publications of the American Statistical Association, March, 1909. 


>| 


36 Hoffman. American Public Pension Systems. 


it may deem advisable. As yet the commission has not been 
sufficiently long established to prove its usefulness in the direction 
indicated by the specific provisions of the act. 


38. The Carnegie Teachers’ Pension Fund. 


In 1905 Mr. ANDREW CARNEGIE established a national retiring 
allowance system for university professors, with a permanent fund 
of ten million dollars and an approximate annual income of 
$ 500,000. Actuarial advice was relied upon in establishing the 
fundamental principles for the administration of the fund and upon 
the basis of a preliminary estimate it was assumed that the fund 
would be sufficient to provide an average allowance of § 1,500 
a year to such retired teachers and their widows as were likely 
to be furnished by a body of three thousand professors. It is pointed 
out, however, in an explanatory statement that, 


“The truth is, however, that the matter is only in a partial sense an 
actuary’s problem; all these assumptions do not detract from the fact 
that a well informed and conscientious body of trustees can, with the 
amount of income now in their control, maintain a satisfactory system 
of retiring allowances for perhaps five thousand teachers, distributed 
in about one hundred and twenty institutions. To do this is mainly a 
problem of common sense and fairness and not one of actuarial com- 
putation”’. 


It was said further with regard to this matter that the actuarial 
advice to the trustees could be summed up in the words of the 
Actuaries consulted, that 


“The problem is only partly actuarial. No man can possibly predict 
what will happen under any assumed method of retirement. Frame your 
rules according to your judgment of what will best serve the interests of 
the teachers, within the general estimates indicated. Reserve carefully the 
power to amend your rules of retirement as circumstances may require, 
and go forward to acquire such experience as will enable you to make 
permanent and final rules”’. 


The following two rules are Saleceasieiepeayes of the plan adopted 
in 1909, although it is quite possible that minor changes have 
subsequently been made: 


Rule 1. Retirement on the Basis of Age. Any person sixty-five years 
of age, who has not had less than fifteen years of service as a professor 
and who is at the time a professor in an accepted institution, shall be 
entitled to. an annual retiring allowance, computed as follows: 

a. For an active pay of twelve hundred dollars or less, an allowance 
of one thousand dollars, provided no retiring allowance shall exceed 
ninety per cent of the active pay. 


Hoffman. American Public Pension Systems. 37 


b. For an active pay greater than twelve hundred dollars the retiring 
allowance shall equal one thousand dollars, increased by fifty dollars for 
each one hundred dollars of active pay in excess of twelve hundred dollars. 

c. No retiring allowance shall exceed four thousand dollars. 

Computed by the formula: R = +-+ 400, where R = annual retiring 
allowances, A = active pay. 


Rule 2. Retirement on the Basis of Service. Any person who has hada 
service of twenty-five years as a professor, and who is at the time a 
professor in an accepted institution, shall be entitled to a retiring allowance 
computed as follows: 

a. For an active pay of twelve hundred dollars or less, a retiring 
allowance of eight hundred dollars, provided that no retiring allowance 
shall exceed eighty per cent of the active pay. 

b. For an active pay greater than twelve hundred dollars, the retiring 
allowance shall equal eight hundred dollars, increased by forty dollars for 
each one hundred dollars in excess of twelve hundred dollars. 

c. For each additional year of service above twenty-five, the retiring 
allowance shall be increased by one per cent of the active pay. 

d. No retiring allowance shall exceed four thousand dollars. 

Computed by the formula: R = % (b+ 15) + 320, where R = 
retiring allowance, A =: active pay, and 6 = number of years of service. 


It is not necessary to enlarge upon the details of this rule further 
than to say that in addition thereto the executive committee have, 
by the authority of the trustees, granted occasional disability allow- 
ances, usually of one or two years’ duration. 

The third rule provides pensions for the widows of teachers who 
either on the ground of age or service will be entitled to retiring 
allowances. In actual practice the rules have thus far been found 
to meet the exigencies of the situation, but it is quite probable 
that the fund has been committed to larger future expenditures 
than the original endowment is sufficient to provide. The disburse- 
ments for 1906—19gI0 are given in the following table: 

















No. of Amount of Woot Amount of ee Guar 
, Retirement : Widows 
Year Retired Altova nces Widows Deacons Suto ae 

Teachers Paid Pensioned Paid Paid 
1906 1) 83. | $ 21,953°06 8 $ 1,249°95 | $ 23,203°0! 
1906—7 143 » 125,228°20 16 » 10,459°06 » 135,687°26 
1907—8 190 hew2e0.274 2.43 29 » 20,367 ° 68 » 246,642 °41 
1908 —9 285 » 311,009°23 | 46 » 32,861 °67 » 343,870°90 
1909-10 290 » 423,901 °49 57 » 45,932 °81 » 469,834" 30 
1910—II | 297 — | 73 + -- 


1) June to October, 


’ 


38 Hoffman. American Public Pension Systems. 


39. Moral and Economic Fustification of the Contributory System. 


The experience of the fund is a most instructive contribution 
to actuarial science and emphasizes not only the need of qualified 
actuarial advice, but the necessity of subsequent conformity to 
actuarial considerations. This. fact is clearly recognized by the 
president and trustees of the Carnegie Foundation for the Advance- 
ment of Teaching and in the Fourth Annual Report 1) there is 
an extended discussion of ‘The Teacher’s Obligations in Life 
Insurance’, which may profitably be consulted by anyone interested 
in the subject. The address concludes with the following statement 
by the President of the Fondation: 

“T have ventured to revert to this topic again in connection with the 
consideration of the rules for retiring allowances on account of the evidence 
which has come to the Foundation during the past, showing the general 
failure of the great mass of teachers, even in colleges, to face their 
responsibilities in this matter. The reason for this discussion is further 
emphasized by the fact that many teachers have the misconception that 
the retiring allowances take the place of life insurance’. 

I also quote the following very suggestive conclusion by 
DR. PRITCHETT, from an article on ‘The Moral Influence of the 
University Pension System’, contributed to the November, 1911, 
issue of Popular Science Monthly : 

“It is, to my thinking, a fair question whether the college pensions 
ought not, like other pensions, to carry a contributory feature. No one 
can be more sensible than I of the tremendous demands made upon the 
meager salaries of the American college teacher from those social and 
moral obligations which affect all men. The experience of the world seems 


to point strongly to the conclusion that on the whole a contributory form 
of pension is likely to be most just and least harmful”. 


Ao. Conclusion. 


In the foregoing discussion I have limited myself to a brief 
account of the various pension systems or methods which have 
been established in the United States, practically from the foundation 
of the government to the present time. Since most of the infor- 
mation is not readily accessible to the student of the subject, | 
have given the preference to a statement of the facts and I have, 
therefore, refrained from a critical discussion, on account of the 
required limitations of space. It is evident that the American 


1) The Carnegie Foundation for the Advancement of Teaching, 4th Annual Report, 
New York, 1909, p. 61 et seq. 


vy 


Hoffman. L’Organisation des Pensions Publiques en Amérique. 39 


military and most of our state and municipal pension systems have 
been developed with an entire disregard of actuarial and general 
insurance considerations. As a result, an enormous liability has 
accrued, which must needs constitute, for years to come, a serious 
financial burden upon the people at large. The contributory principle 
which underlies the voluntary plan of life insurance, or a provision for 
immediate and deferred annuities, has also been generally disregarded, 
but it is a decidedly encouraging indication of a profound change 
in public opinion, that the proposed system of retiring superannuated 
civil service employees and the recently established retirement 
system for state and county employees in Massachusetts, as well 
as a number of teachers’ retirement funds, concede the necessity, 
as well as the justice, of the contributory principle. It is further 
evident that the public consideration of the pension question in 
the United States during recent years has properly taken into 
consideration the actuarial aspects of the problem and recognized 
the imperative necessity of qualified actuarial advice. To the extent 
that this has been the case, a most desirable advance has been 
secured for actuarial science in the United States, in its relation 
to the practical solution of serious problems of government concern. 


L’ORGANISATION DES PENSIONS PUBLIQUES ET LES 
PRINCIPES POUR LA MISE EN RETRAITE DES 
FONCTIONNAIRES DES ADMINISTRATIONS CIVILES 
EN AMERIQUE 


PAR 


Fr. L. HOFFMAN, Newark, N.Y. 


Un syst®éme de pensions publiques dans le sens proprement 
dit du mot n’a pas encore été réalisé dans les Etats-Unis. Les 
systémes de pensions militaires se réduisent en pratique au paiement 
de rémunerations qui sont considérées comme une récompense 
posticipée des services rendus précédemment en temps de guerre. 
L’habitude d’accorder des pensions militaires remonte jusqu’a 
Yorigine du Gouvernement de |’Union, mais avant la guerre civile 


mT 


40 Hoffman. L’Organisation des Pensions Publiques én Amérique. 


de 1861—1865 les sommes dépensées a cet égard n’avaient atteint 
qu’une importance relativement limitée. Depuis la guerre civile, 
l'état des pensions militaires a pris une étendue enorme et le 
courant public tend toujours a l’augmenter; on se montre de plus 
en plus disposé a améliorer d’une fa¢gon libérale la position 
financiére des citoyens qui ont pris part dans les combats pour 
la patrie, ainsi que des descendants des victimes de ces combats. 
Les dépenses pour retraites qui viennent charger les budgets 
des Etats-Unis a la suite des différentes guerres et de la pacifi- 
cation a lintérieur, s’élévent d’aprés les évaluations faites pour 
V’époque de 1789 a 1g11t au chiffre de 4230 millions de Dollars. 
Les différentes lois de retraite ayant été formulées sans tenir 
compte de principes actuariels, les estimations des dépenses ont 
été toujours surmontées d’une maniére tout a fait inattendue. A 
cété de l’ancien systéme des pensions militaires, on s’est habitué 
successivement A accorder des pensions aux officiers et soldats 
qui — sans avoir pris part dans une guerre — quittent l’armée 
A cause de leur Ages ou de l’incapacité au service; cette habitude 
s’applique a l’armée territoriale autant qu’A la marine, aux officiers 
aussi bien qu’aux soldats. I] n’y a pas de statistiques consciencieuses 
sur les dépenses encourues a ce dernier titre. 

Ce sont ces mémes principes qui régissent les réglements 
relatifs aux pensions des juges; les dits réglements ne s’appliquant 
qu’aux membres tribunaux fédéraux, les paiements pour retraites 
dans les années 1g02 a IgII nont été que de 945.912 dollars. Ilvasans 
dire que ces paiements: devraient étre considérés comme quote- 
parts différées des salaires ou des remunérations; néanmoins on 
ne tient jamais compte de cette considération économique lors de 
inscription des dits paiements aux budgets réguliers. 

Des pensions militaires sont accordées egalement par plusieurs 
Etats du Sud aux survivants des soldats et marins de la confédé- 
ration. La aussi on a été desagréablement surpris par le fait 
que les dépenses effectives ont dépassé les chiffres préliminés dans 
une progression trés sensible. En dehors des paiements effectifs 
pour pensions, il faut partout soutenir les dépcnses considé- 
rables pour les soldats et marins qui se trouvent dans les asyles, 
ainsi que pour les veuves et orphelins laissés sans subsistances. 
Tous ces frais représentent également des dépenses pour les 
anciens combattants dans les guerres de la nation. 

Quant aux fonctionnaires des administrations c/fviles, on attend 


Hoffman. L’Organisation des Pensions Publiques en Amérique. 41 


toujours qu’un systéme de pensions soit définitivement établi par 
les facteurs de la législation. Jusqu’a présent, une loi pareille 
n'a pas pu étre votée, bien que des propositions y afférentes 
solent soumises depuis plusieurs années a la discussion publique. 
Cest Mr. HERBERT D. BROWN a Washington D. C. qui a étudié 
4 fond le matériel total de cette question. D’aprés les susdits 
projets on s'est .décidé A demander, en couverture d’une partie 
des charges de retraites, des contributions proportionnelles de la 
part des employés, en tenant diment compte de l’Age et de la 
durée .du service. Ce principe a soulevé une opposition acharnée 
de la part d'une grande partie des fonctionnaires d’Etat qu 
declarent ne pouvoir accepter que l’une au l'autre des deux alter- 
natives suivantes: ou une augmentation considérable des salaires 
permettant aux employés de faire face aux paiements des contri- 
butions, ou la constitution de retraites d’aprés le simple syst¢me 
d’assistance, c.ad. sans prélévement de contributions sur les 
salaires. A lheure qu'il est, le Congrés de Washington est saisi 
de cette question, mais il se peut fort bien qu’une action décisive 
soit remise 4 quelques années. Le systéme du prélévement de 
contributions sur les salaires rencontre l’approbation tant du Prési- 
dent TAFT que des membres du Gouvernement qui se sont familia- 
risés 4 l'étude de ce probléme; or, on admet bien, de la part du 
Gouvernement aussi, la nécessité dintroduire un systéme de 
pensions civiles, permettant de décharger le service d’un nombre 
considérable d’employés d’un Age avancé et d’une activité reduite. 

Il y a, dans les Etats-Unis, assez de Caisses de retraite pour 
des maitres d’écoles, des sergeants et divers autres groupes de 
fonctionnaires des Etats et des Communes; mais toutes ces Caisses 
souffrent du fait qu’elles sont organisées avec négligence de 
principes actuariels et des bases fondamentales de toute assurance 
sur la vie. Il s’en suit qu’un nombre de ces caisses est déja 
incapable de faire face A ses obligations; en conséquence il y 
a assez de Communes qui se voient actuellement en présence de 
difficultés sérieuses auxquelles ils ne pourront remédier a l'avenir 
que par une évolution technique dirigée d’aprés des conseils 
raisonnables et conservatoires. Dans les derniers temps, il y a 
lieu de signaler un pas important dans la voie juste qui a été fait 
par l’Etat de Massasuchetts. Dans cet Etat, on a mis en vigueur, 
& partir du 1% janvier 1912, un systéme de retraites pour les 
fonctionnaires de l’Etat et des Communes; ce systéme prévoit 


42 _Hoffman. L’Organisation des Pensions Publiques en Amérique. 


comme condition essentielle le prélévement de contributions sur 
les salaires. 

De méme, le mouvement en faveur d’un systéme général de 
pensions de vieillesse pour la population entire — d’aprés le 
modéle de la loi anglais de 1908 — n’a pas pu se faire valoir 
jusqu’a présent dans les Etats-Unis, bien que l’opinion publique 
en ait été saisie avec beaucoup d’empressement. 

En effet, il n’y a pas de nécessité ni économique, ni sociale pour 
une institution pareille, étant donné que la plus grande majorité 
de la population est sans doute capable de pourvoir par ses propres 
forces, dans une mesure limitée, aux exigences financiéres de leur 
vieillesse. De la part de corporations industrielles on remarque 
de plus en plus la tendance de garantir 4 leurs employés des 
pensions de vieillesse a l’Age de 55 ou 60 ans. Un événement 
trés remarquable du dernier temps est le fonds de retraites pour 
maitres d’écoles organisés par CARNEGIE; ce fonds, par des dotations 
trés importantes a été destiné au but de garantir des retraites aux 
professeurs des universités et des écoles moyennes en Amérique. 

Bien que, lors de |’établissement des principes actuellement en 
vigueur pour la mise en retraite, des considérations actuarielles 
aient été observées, il faudra toutefois, pour des raisons pratiques, 
procédér dans un prochain avenir a une réorganisation de bases 
de retraite. I] est fort probable que dans ce fonds on adoptera 
également le principe du prélévement de contributions, ce principe 
ayant déja été approuvé généralement par le Président de |’Insti- 
tution de Charité pour favoriser les intéréts des fonctionnaires de 
instruction publique. 

En considérant tout ce qui précéde, nous arrivons a la conclusion 
suivante: Dans la discussion publique sur les problémes de retraites 
dans les Etats-Unis, on s’est convaincu de plus en plus de l’importance 
au cdté actuariel et de la nécessité de recourir a la collaboration 
d’actuaires consultants diment qualifiés. Ce progrés, il va sans 
dire, est en méme temps un progrés de la science actuarielle, 
parce qu'il démontre clairement aux facteurs de la législation ainsi 
qu’a l’opinion publique, dans quelle mesure cette science est 


capable de contribuer 4 la solution pratique de problémes importants 


de l’administration. 





Hoffman. Oeffentliche Pensionssysteme in Amerika. 43 


OEFFENTLICHE PENSIONSSYSTEME UND GRUNDZUGE 
FUR DIE PENSIONIERUNG VON ZIVILSTAATSBEAMTEN 
IN AMERIKA 


VON 


Fr. L. HOFFMAN in Newark. 





Ein System 6ffentlicher Pensionen im eigentlichen Sinne des 
Wortes hat sich in den Vereinigten Staaten bisher noch nicht 
durchgesetzt. Das militarische Pensionsnormal bedeutet praktisch 
nichts anderes als die Bezahlung von Entlohnungen, als eine nach- 
tragliche Wiirdigung der in Kriegszeiten geleisteten Dienste. Die 
Gewahrung militarischer Pensionen reicht bis auf den Ursprung 
der Unionsregierung zurtick, doch waren die hiefiir aufgewendeten 
Betrage bis zu dem Biirgerkriege von 1861—1865 von relativ ge- 
ringer Bedeutung. Seit dem Biirgerkriege hat der militadrische 
Pensionsetat enormen Umfang erreicht und die Tendenz bewegt 
sich auch heute noch nach der Richtung hin, dass der finanziellen 
Notlage solcher Birger, welche an Kampfen fiir das Vaterland 
teilgzenommen haben, bezw. ihrer Hinterbliebenen in immer liberaler 
Weise abgeholfen werden soll. Die Pensionsausgaben, welche den 
Vereinigten Staaten zufolge der verschiedenen Kriege und der 
Herstellung des innern Friedens erwachsen sind, diirften sich nach 
den vorgenommenen Schatzungen fiir den Zeitraum von 1789— 
Igtt auf 4.230 Millionen Dollars belaufen. Die verschiedenen 
Pensionsgesetze wurden ohne Beriicksichtigung versicherungs- 
technischer Grundsdtze erlassen und es haben denn auch die 
faktischen Kosten die urspriinglichen Schatzungen in ganz unver- 
haltnismassiger Weise iiberstiegen. Zu dem System der Militar- 
pensionen ist spdterhin die Gepflogenheit hinzugetreten, auch ausser 
dem Falle des Krieges, bei Ausscheiden aus dem aktiven Muilitar- 
dienste infolge Dienstunfahigkeit oder Alters Ruhegeniisse zuzuge- 
stehen. Dies gilt fiir die Landarmee sowohl als fiir die Marine, 
u. zw. fiir Offiziere und fiir Soldaten. Ueber die Ausgaben aus 
diesem letzteren Titel existieren keine verlasslichen statistischen 
Daten. Auf einem @hnlichen Prinzipe beruhen die Vorschriften 
iiber die Pensionen der Richter, welche sich indes nur auf die 
Mitglieder der Bundesgerichte erstrecken; auf Grund dieser Gesetze 


\ 


44 Hoffman. Oeffentliche Pensionssysteme in Amerika. 


wurden in den Jahren 1902—r1g911 Pensionen von insgesamt 
945.912 Dollars ausgezahlt. Derartige Pensionszahlungen sind 
natiirlich nichts anderes als aufgeschobene Bestandteile des Gehaltes 
oder Lohnes; nichts destoweniger wird bei der Bedeckung solcher 
Zahlungen vollig ohne Riicksicht auf versicherungstechnische Erforder- 
nisse vorgegangen. Militarpensionen wurden auch seitens mehrerer 
Siidstaaten an die tiberlebenden Soldaten und Matrosen der Konfé6- 
deration gewdahrt. Auch hier haben die einschlagigen Auslagen 
die urspriinglichen Kostenschatzungen in ausserordentlich empfind- 
licher Weise tibertroffen. Neben den eigentlichen Pensionszahlungen 
sind iiberall noch betrachtliche Ausgaben fiir die in Versorgungs- 
hausern aufgenommenen Soldaten und Matrosen, weiters fiir die 
Invaliden und fir die Hinterbliebenen erwachsen. Diese Kosten 
sind nichts anderes als Bestandteile der Aufwendungen fir die 
Hinterbliebenen der Kampfer aus den Kriegen der Nation. 

Ein Pensionssystem fiir den Zivil-Staatsdienst, d. h. eine ge- 
setzliche Grundlage fiir die Gewahrung von Ruhegeniissen an Zivil- 
Staatsbeamte wurde in den Vereinigten Staaten bisher noch nicht 
zum Gesetze erhoben, wiewohl derartige Vorschlage seit mehreren 
Jahren zur Diskussion stehen. Der gesamte hieher gehdrige Komplex 
von Fragen wurde von Mr. HERBERT D. BROWN in Washington D.C. 
sorgfaltig erwogen. Nach diesem Plane wird die Einhebung von 
pro rata Beitragen von seiten der Zivil-Staatsangestellten vorgeseken, 
wobei auf Alter and Dienstzeit gebiihrend Riicksicht genommen 
werden soll. Hiegegen hat sich Opposition van seiten eines grossen 
Teiles der Staatsangestellten erhoben; diese Opposition verlangt 
entweder eine betrachtliche Erhéhung der Gehalter, um die ge- 
forderten Pensionsbeitrage erschwingen zu kénnen, oder sie spricht 
sich, fiir die Gewahrung von Pensionen nach dem reinen Ver- 
sorgungssystem ohne die Einhebung irgendwelcher Beitrage aus. 
Die Frage liegt derzeit dem Kongresse zur Erwagung vor, allein 
es ist sehr wohl méglich, dass eine entscheidende Aktion noch 
durch einige Jahre hinausgeschoben wird. Das System der Gewahrung 
von Pensionen unter Einhebung von Beitragen wird sowohl vom 
Prasidenten TAFT als auch von seiten der mit den Verhaltnissen 
vertrauten Mitglieder des Kabinets gebilligt, auch in den Kreisen 
der Regierung erkennt man die Notwendigkeit der Einfiihrung 
eines Pensionssystems durch welches der Dienst von einer be- 
trachtlichen Anzahl alter und in ihrer Arbeitskraft mehr oder minder 
zuriickgebliebenen Beamten entlastet werden soll. 


+. 


Hoffman. Oeffentliche Pensionssysteme in Amerika, 45 


Pensionen und Ruhegeniisse fiir Lehrer, Polizisten und andere 
Gruppen von Staats- und Gemeinde-Angestellten wurden in den 
Vereinigten Staaten fast tiberall in ansehnlichem Umfange aktiviert ; 
hiebe1 hat man aber nie auf gesunde versicherungstechnischen 
Prinzipien oder auf die bewahrten Grundsatze der Lebensversiche- 
rung Riicksicht genommen. Die Folge ist, dass viele Pensionsfonds 
insolvent sind und dass so manche Gemeinde jetzt vor einer 
ernsten Frage steht, welche ftir die Zukunft in gliicklicher Weise 
nur durch Beachtung richtiger une konservativer technischer 
Ratschlage in befriedigender Weise gelést werden kann. Aus 
jungster Zeit ist als ein wichtiger Schritt auf dem richtigen Wege 
das Vorgehen des Staates Massasuchetts zu registrieren. In diesem 
Staate wurde ein Pensionssystem fiir ausgediente Staats- und 
Gemeinde-Angestellte erlassen, welches mit 1. Januar 1912 in 
Kraft getreten ist. Hiebei wird die Einhebung von Beitragen als 
eine wesentliche Grundlage des finanziellen Erfolges anerkannt. 

Auch die Bestrebungen nach Einfiihrung eines allgemeinen 
Altersrentensystems — entsprechend dem Vorbilde des englischen 
Gesetzes von 1908 — konnten sich bisher in den Vereinigten 
Staaten keine Geltung verschaffen, wiewohl auch dieser Gegen- 
stand die 6ffentliche Meinung sehr lebhaft beschaftigt hat. Es 
besteht keine wirtschaftliche oder soziale Notwendigkeit fiir die 
Einftihrung einer derartige Institution, denn die tberwiegende 
Mehrheit der Bevélkerung kann ohne Zweifel in einer bescheidenen 
Weise aus eigener Kraft fiir die pekunidren Erfordernisse des 
Alters vorsorgen. Auf seiten industrieller und anderer Korporationen, 
einschliesslich der grossen Transportunternehmungen, besteht die 
entschiedene Tendenz, ihren Angestellten bei Erreichung des 
Alters von 65 oder 70 Jahren Ruhegeniisse sicherzustellen. Eine 
sehr bemerkenswerte Erscheinung der neuesten Zeit ist auch der 
von CARNEGIE errichtete Pensionsfond fiir Lehrpersonen, welcher 
durch sehr hohe Zuwendungen zu dem Zwecke ausgestattet wurde 
um eine Versorgung fiir die Mitglieder der Lehrkérper einer 
betrachtlichen Anzahl amerikanischer Universitaten und Mittel- 
schulen zu bieten. Wiewohl bei Festlegung der Pensionsgriind- 
sitze in der gegenwartig geltenden Form versicherungstechnische 
Erwagungen zu Rate gezogen wurden, diirfte sich doch praktisch 
in der nachsten Zeit die Notwendigkeit einer Umgestaltung der 
Pensionsgrundlagen ergeben. Es ist anzunehmen, dass hier das 
System der Entrichtung von Beitragen durchgefiihrt werden wird, 


46 Hoffman. Oeffentliche Pensionssysteme in Amerika. 


welches in der Tat bereits die prinzipielle Wiirdigung seitens des 


Prasidenten der CARNEGIE-Stiftung fiir die cigs der Interessen 
von Lehrpersonen erfahren hat. 

Unter den geschilderten Umstanden ist es offenkundig, dass bei 
der 6ffentlichen Diskussion tiber Pensionsfragen in den Vereinigten 
Staaten im Laufe der letzten Jahre auch das Interesse fiir die 
versicherungstechnische Seite des Problems wesentlich in den 
Vordergrund getreten und die absolute Notwendigkeit qualifizierter 
technischer Begutachtung anerkannt worden ist. Je mehr sich diese 
Erkenntnis Bahn bricht, destomehr kommt dies zugleich auch dem 
Fortschritte der Versicherungswissenschaft in den Vereinigten 
Staaten zugute, denn es wird hiedurch der Oeffentlichkeit vor 
Augen gefiihrt, wie viel die Versicherungswissenschaft auch zur 
praktischen Lésung wichtiger Probleme der staatlichen Verwaltung 
beizutragen vermag. 





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